Insurance in Owner and Seller Financed Land Purchases: Why You Need It and How It Works
Why Insurance is Important in Owner and Seller Financed Land Purchases
There are a number of risks associated with owner and seller financed land purchases. As the buyer, you could default on your loan, which would leave the seller unable to recoup their investment. Or, as the seller, you could be sued by the buyer if they feel that you misrepresented the property in some way. In either case, having adequate insurance coverage can help protect both parties from financial ruin.
How Insurance Works in Owner and Seller Financed Land Purchases
In most cases, the party who is financing the land purchase (the buyer or the seller) will be responsible for obtaining insurance. The type of policy you'll need will depend on a number of factors, including the amount of money being borrowed, the length of time over which the loan will be paid back, and whether or not there is a mortgage involved. Generally speaking, you'll want to purchase an "owner's title insurance policy" or a "lender's title insurance policy." These policies will protect you from any losses that occur as a result of defects in the title of the property.
If you're planning on financing a land purchase, it's important to understand the role that insurance plays. Insurance can help protect both buyers and sellers from financial losses that might occur as a result of defects in the property title or other unforeseen circumstances. When purchasing insurance for an owner or seller financed land purchase, be sure to purchase an "owner's title insurance policy" or a "lender's title insurance policy" to get adequate coverage.